There are many well intentioned people across America advocating a “public option” or Washington-centered health care reform. As they continue their campaign, proponents should examine what has happened in Maine. We can share our extensive experience with a government option experiment of our own: Dirigo.

The similarities are striking.

Advocates begin their arguments for a government option plan by promising this idea is not socialized medicine, and it will work alongside private insurance companies already in the market. The government option would create a new Washington bureaucracy to develop, market and control new government health plans to compete with the plans offered by existing private insurers, allowing consumers to choose between the established private companies or a new government-run plan.

Government option proposals rely heavily on the assumption that a new government agency is more efficient than a for-profit or not-for-profit private insurance company. They promise that a new national bureaucracy will offer competitive, comprehensive health plans that cost less. Proponents admit that a government option will require significant taxpayer dollars during the startup phase, but will reach a break-even point quickly because the new government health option will be popular.

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In fact, proponents argue, the government option policies will be such a perfect combination of low prices and outstanding coverage that previously uninsured people will see the benefit of buying this coverage and voluntarily do so.

Government option advocates also maintain that, because Washington-issued plans would cover so many previously uninsured people, the overall costs associated with health care will fall. These savings will be passed along to the government option policyholders or kept in the pockets of the for-profit private insurers.

The same arguments were made in Maine in 2003 when Dirigo Health was first enacted.

Dirigo Health was established using $53 million of one-time federal money. It was supposed to become a national model that would inspire other states to enact a similar government program. After that, it was to be a self-sustaining agency that sold and operated its own health plans. Funding would come from premiums paid by policyholders and through an assessment of the savings realized by private insurance companies when providers lowered their costs due to the projected drop in uninsured Mainers. Dirigo’s supporters promised the new government program would cover Maine’s 128,000 uninsured people by 2009. If those with lower incomes had trouble affording the monthly premiums, subsidies would be available. No new taxes would be imposed to pay for the government option.

Six years later, what are the results?

At launch, Dirigo limited enrollment so this new state agency could handle the demand for a new government plan. While Dirigo was promoted as an option for the uninsured, for every uninsured person voluntarily enrolling, two people switched from private coverage to government-subsidized Dirigo. Costs skyrocketed and the uninsured rate remained relatively flat.

Despite enthusiastic press coverage and continual promotion by state leaders, the initial enrollment in Maine’s government option policies was disappointing and things never improved at Dirigo. Due to financial instability, Dirigo’s enrollment has been closed since September 2007.

At its highest level of enrollment in September 2007, only 15,000 Mainers were covered by Dirigo. Today, only 9,630 Mainers are enrolled, and of those, just 3,467 were previously uninsured — less than 3 percent of the 128,000 people this government option was designed to insure.

The Dirigo government option was to be financed by capturing the theoretical savings the government caused through an assessment on private insurance plans and self-funded group plans. This “Savings Offset Payment” was essentially a tax on private insurance to help pay for a government option program that was supposed to reduce insurance costs. An attempt to get away from this controversial idea by raising taxes on beverages and insurance claims was soundly rejected by Maine voters last November. At Gov. John Baldacci’s request, a majority of the Legislature just voted to dump this elaborate but intellectually suspect annual calculation of Dirigo savings for a straight tax on health insurance claims.

Maine’s Dirigo experiment has been a costly failure. Dirigo’s government option has not covered the uninsured. Dirigo’s government option has resulted in a new tax on the hundreds of thousands of Mainers struggling to afford private coverage.

Dirigo is Maine’s motto and is Latin for “I lead.” For Congress, Maine’s Dirigo experiment can lead by example of what not to do.

Tarren Bragdon is the chief executive officer of The Maine Heritage Policy Center. He will be at a series of federal health reform presentations including on Friday, June 19 in Bangor. See www.MainePolicy.Org for a full listing of these statewide events.